French presidential elections: Are markets concerned?

In this week’s video update:

  • Will the French presidential election give Eurozone markets a lift?
  • Does the lack of a U.S. Federal Reserve (the Fed) interest rate hike in May make a June hike more likely?
  • What’s the impact of Puerto Rico defaulting on its debt?

Mark Eibel said he believes a relatively predictable election outcome in France is giving European markets a lift.

On this week’s episode of Market Week in Review, Director, Client Investment Strategies Mark Eibel was joined by Sophie Antal Gilbert, program director, advisor insights. Eibel noted that Russell Investments strategists project the election to go as expected, with a win for pro-European-Union candidate Emmanuel Macron and a loss for French populist candidate Marine Le Pen. Eibel also stated that our strategists think European markets are getting an upward lift from these predictable outcomes.

Eibel noted that eurozone stocks hit a 20-month high this week, based on market fundamentals.

Fed updates

The U.S. Federal Reserve met this week and chose not to raise rates. Eibel noted that this lack of action, when tied with positive U.S. jobs creation numbers—about 211,000 new U.S. jobs in April—make a June rate increase more likely than previously thought.

The Puerto Rican debt default

For those exposed to Puerto Rican bonds, the news of a Puerto Rican default on its debt raised some concerns. According to Eibel, the news didn’t really move the market, because the default was likely already priced in. Eibel noted that the underlying bonds were uninsured, and encouraged investors to take a look at their portfolios and consider their exposures to insured-versus-uninsured debt.